Page 160 - Martin Marietta - 2024 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Residential
The residential construction market accounted for 24% of the Company’s aggregates shipments in 2023. This end use typically
moves in direct correlation with economic cycles. The Company’s exposure to residential construction is split between aggregates
used in the construction of subdivisions (including streets, sidewalks, utilities and storm and sewage drainage), single‐family homes
and multi‐family units. Construction of both subdivisions and single‐family homes is nearly three times more aggregates intensive
than construction of multi‐family units. Therefore, the level of new subdivision starts, as well as new single‐family housing permits,
is a strong leading indicator of residential volumes. For the year ended December 31, 2023, not seasonally‐adjusted national
housing starts decreased 9% to 1.41 million units compared with 2022 and not‐seasonally‐adjusted national housing permits
decreased 12% versus 2022. As interest rates stabilize and affordability headwinds recede, the Company expects single‐family
residential construction to recover as demand still far exceeds supply, particularly in the Company's key markets.

ChemRock/Rail
The remaining 5% of the Company’s 2023 aggregates shipments was to the ChemRock/Rail market, which includes ballast and
agricultural limestone. Ballast is an aggregates product used to stabilize railroad track beds. Agricultural lime, a high‐calcium
carbonate material, is used as a supplement in animal feed, a soil acidity neutralizer and agricultural growth enhancer. Additionally,
ChemRock/Rail includes rip rap (used as a stabilizing material to control erosion caused by water runoff at embankments, ocean
beaches, inlets, rivers and streams), and high‐calcium limestone (used as filler in glass, plastic, paint, rubber, adhesives, grease and
paper). Chemical‐grade, high‐calcium limestone is used as a desulfurization material in utility plants.

Pricing Trends
Materials pricing for construction projects is generally based on terms committing to the availability of specified products of a
stated quantity at an agreed‐upon price during a definitive period. Since infrastructure projects span multiple years, announced
price changes can have a lag time before taking effect while the Company sells products under existing price agreements. Pricing
escalators included in multi‐year infrastructure contracts serve to somewhat mitigate this effect. However, during periods of sharp
or rapid increases in production costs, multi‐year infrastructure contract pricing may provide only nominal pricing growth.
Additionally, the Company may implement multiple price increases throughout the year, on a market‐by‐market basis, where
appropriate, as was done in 2023 and 2022. Pricing is determined locally and is affected by supply and demand characteristics of
the local market. For further information on pricing, see the discussion in the Financial Overview section.

Page 58 ♦ 2023 Annual Report